Temporary Assignment Limits and Concerns About Benefits Liability

In the wake of historic employment litigation (e.g., Vizcaino v. Microsoft), some companies have adopted policies limiting assignment length for temporary and contract employees from staffing firms. Why? These employers view assignment limits as a way to protect themselves from the kind of “retro-benefits” claims Microsoft faced back in the 1990s.

Unfortunately, these assignment limit policies have downsides. They can cause economic harm to on-time temporary or contract employees whose assignments are terminated prematurely, and they can disrupt your company’s business operations. To better protect your organization, you should closely examine its staffing policies to ensure that such limits are truly necessary – and not based on misinformation.

If you have questions about co-employment law, as it relates to assignment limits and associated benefits, here is a great resource with the answers you need. The American Staffing Association’s Staffing Smarts Intelligence Report: Assignment Limits and Concerns About Benefits Liability, by Edward A. Lenz, Esq., General Counsel, reviews the basic principles of law that apply to employee benefits plans, and then describes steps employers can take to avoid retro-benefits exposure:

Create a plan that expressly excludes staffing firm employees. The report suggests template language (that your legal counsel should review) you can use for the purpose of excluding staffing firm employees from participation in your Erisa plan.

Use employee waivers. In addition to amending benefits plans, you may be able to achieve additional protection through agreements in which the staffing firm’s employees expressly waive their right to the company’s benefits.

Keep the lines between direct staff and contingent staff clear. The report includes several other steps (such as channeling social invitations through the staffing firm) you can take to avoid blurring the distinction between your core staff and temporary employees.